Value Invest

October 2013

Warren Buffett on the irreversible nature of pension plan promises
This is a wonderful memo written by Buffett in 1975 to the Washington Post Chief Executive Katharine Graham with advice on the pension plan (which is now one of the few with a surplus). It captures much of Buffett’s often quoted views on market behaviour and how to look at stocks.  It ends with a great if somewhat understated quote: “A mildly non-conventional investment approach, emphasizing a business approach to security selection, gives some opportunity for long-term results slightly above average without corresponding increase in investment risk”.

Value Investing 101
This article, written by Simon in July, was recently published in Share magazine. The article was written for a retail investing audience and attempts to define what is and is not value investing. For regular readers of the Value Investor Digest, the article will provide nothing new although the precise boundaries of value investing are often debated. ‘“If you are holding a stock and its price drops sharply, is your instinct to sell the stock”? A value investor will always have the opposite instinct’. Simon concludes that maybe this behavioural trait is the simplest test for whether you are a value investor.

Screening for value
This Value Institute article focuses on the debate over whether the best source of generating good investment ideas is screening the market, or to take a more Buffett-like qualitative approach. In the article, the author recounts a recent conversation he had with a proponent of the screening approach: “I still can’t see how it’s possible to whittle down your opportunity set to the one or two stocks that you might buy in a year [without screening]” He’s married, so I retorted: how did you whittle down all the potential girls in the world and end up with your wife? The answer of course is that he didn’t use anything like a screen, rather he simply searched for good characteristics in a partner and when he came to one he loved, he ‘bought’.”

Has Momentum Investing lost some momentum?
This FT article ponders whether the recent poor performance of some trend following funds is a permanent change, or whether the current investing climate has only distorted some of the behavioural characteristics which have led to prior success. The author concludes that it is unlikely that momentum investing will be a failed strategy long-term, as the human traits that cause trend following to be successful are deeply ingrained within the behaviour of most market participants. He goes on to suggest that one answer is to use both a value strategy and a momentum strategy within your portfolio.

How the economic machine works
Ray Dalio, founder of Bridgewater Associates, provides this simple but practical economic template which he says has helped him to “anticipate and side-step the global financial crisis and has worked well over the past 30 years.”

…Yours Truly, Dan Loeb
“Since you ascended to your current role of Chief Value Destroyer, the shares have dropped over 45 per cent”, is one Dan Loeb line detailed in this FT article, which is an entertaining look at some of the more pointed comments Dan Loeb has made in his publicly communicated letters to CEO’s of  companies he sees as under managed.  There has been a rise in recent years in the number of value investors who have become activist, although Dan Loeb is certainly renowned for the ability to vent his objections in a manner which gets straight to the point.

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Speakers: 14th May 2019

The speaker line-up will be announced in November 2018

  • “It’s very much the Rolls-Royce of the investor conference market”
    Paul Scott, Stockopedia
  • “The people in that room were a more powerful cadre of the powerhouse of investment than has been gathered for a very long time”
    Jonathan Ruffer, Ruffer LLP
  • “It’s kind of like Glastonbury isn’t it, for the Value Investing community”
    Nick Train, Lindsell Train
  • “What I like about it is that it is a practitioners conference and it’s an opportunity to come and hear from your peers about the work that they are doing and how they see value investing”
    Hassan Elmasry, Independent Franchise Partners
  • “I think people really look forward to it and enjoy it. There’s a good bunch of people here who have travelled a reasonable way – the speaker after me was from Hong Kong and there’s a big Canadian crew and a big US crew – people come from around the world to see this”
    Nate Dalton, Affiliated Managers Group
  • “If somebody’s already been through that process of seeing what the conference is about and then is willing to pay their money for the effort of coming here, that’s a great filtering process.”
    Gary Channon, Phoenix Asset Management
  • “The conference has become a part of the furniture of the London scene. You can discover that is what lies inside you – that you are innately a value investor.”
    Richard Oldfield, Oldfield Partners
  • “I do speak at a fair number of conferences to investor bases, this one is really quite a good list – some very, very good investors present and some very interesting speakers”
    Jon Moulton, Better Capital
  • “Definitely worth it and I know a number of people who have ‘ummed and arred’ about coming along and I’m sure that they will be regretting that they didn’t come today – and it’s only going to get better as far as I can see”
    Tim Green, Private Investor
  • “Having sat through the whole day as I wanted to come and hear all of the speakers – I’ve been really impressed by the quality”
    Anthony Bolton, Fidelity
  • “I’ve got a bunch of business cards to add to my collection and some folks I’ve been looking forward to meeting, plus some firms I didn’t even know existed but sound really interesting and I’m looking forward to building on that relationship base”
    Mason Morfit, ValueAct Capital
  • “You couldn’t find that anywhere else really, where you’re speaking to the principals who have been voted on to the Board [of Microsoft] to effect change”
    David Shapiro, Willis Towers Watson
  • “What I was impressed with is, because the subject is very similar, value investing, they found a variety of ways of attacking the same subject. I was also very impressed, having done this in another location, of seeing them stay on target time-wise so that it moves along at a great pace and I think the audience is greatly rewarded by that discipline”
    Don Yacktman, Yacktman Asset Management
  • “Very well organised and it was a treat for investors like us to hear some great speakers”
    Roli Saxena, Drona Capital
  • “I came last year and I liked it so much that I have been looking forward to today ever since”
    Dominique Levy, Sonian Capital
  • “We’e got a very sophisticated audience who are used to value investing – I think this is a good audience”
    David Samra, Artisan Partners
  • “The profile of the speakers is one of the main reasons that I came”
    Niels Borgen, Private Investor
  • “When you look at the ideas speakers have put forward in previous years and how they have performed over the last few years, they’ve done very well – if that performance continues it would be quite remarkable. It does show that you can pick up some good ideas at a conference of this sort”
    Jonathan Mills, Metropolis Capital
  • “I came last year as well and I thought that it was the most outstanding event that I have been to”
    Leon Boros, Equity Strategies